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Purchase
Mortgages - This mortgage type is used to aquire
property, It can be used to buy a new or resale property.
Often, there are two main variation in loan types. Fha or
conventional loans. FHA loans are federally insured mortgages.
The lending guidelines are established by HUD and all mortgage
lenders are required to underwrite customers using the government
establish rules. Conventional Mortgages are loan issued and
insured by private (non-governmental) companies. There are
standard guidelines used to underwrite these loans but they
vary by institutions. |
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Refinance
Mortgages - This loan is used on a property that
currently has a mortgage or has equity available to leverage.
Both FHA and Conventional loans offer a refinancing option.
Many borrowers use refinance loans to consolidate debt, reduced
monthly payment and/or lower rate or term. But the needs that
a refinance loan can meet is varied. Virtually all lenders
offer unique and standard refinance products. They can provide
loans for credit and income grades for A to D. |
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Cash Out Mortgages
- This is a typical refinance that is used to cash that may
held in the equity of the property. The Equity can drawn to
be used for home improvement, debt consolidation and just
for cash in hand.
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Second
Mortgages -This loan is held in second lien position
on the property. This means that it lent with more liability
on the lending institution. In the event of foreclosure the
second mortgage holder has to wait for payment till after
the first liens claim is meet. Most second mortgages are used
to draw cash on the outstanding equity. |
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HELOCs
- Home Equity Lines Of Credit tend to be open lines that can
be drawn on similarly to checking account. The asset backing
the line of credit is the equity in the home. Majority of
HELOCs are adjustable rates and vary on payment form principle
and interest to just interest payments. |
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Investment
Loans - Many times borrowers have a primary residence
and they want to purchase more properties. These properties
are usually considered investment properties and require a
unique loan. This loan type usually requires larger down payments
than a standard loan and often come with a premium to their
rate. |
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Multi-Units
- Multi-Unit properties up to four units can usually qualify
for a standard loan as long as the borrower resides in one
of the units. If the borrower chooses not to reside in the
investment than there is usually a premium adjustment to the
loan product to adjust for the added liability of the lender.
For properties that are multi-units more than four there is
special mortgages designed for the borrowers. |
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Retail/Commercial
- Retail and Commercial establishments usually don't qualify
for standard home loans. There are products available for
these situations. Commercial loans have different terms and
rates compared to residential loans. However, if there is
a residential unit within the commercial/retail property a
standard conventional loan may be available. |
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Tough
Loans - Usually referred to as B,C,D loans or sub-prime
mortgages are loans designed for borrowers who have had challenged
credit or unverifiable income. Most lenders use a ranking
credit score provided by the 3 major credit bureaus to establish
ratings for loan qualifying. When the scores fall below a
range of approval for a standard conventional or FHA loan
then the products available to lend are sub-prime. Also, if
a borrower is self employed and take loses or are unable to
verify all income then they may also require a sub-prime mortgage
product. |
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Equity
- Can best be explained as amount difference between the value
of the home and the current mortgage balance. This amount
is the available equity. It can be tapped through most mortgage
products. Products such as a HELOC, refinance mortgage and
second mortgage may all be available to draw on this available
equity. |
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Fast
Cash - Many refinances are used to gain fast cash
to meet a pressing need like: College tuition, car financing
or home remodeling. Usually the fastest and most secure way
to draw the cash is to use the equity available in the home.
Recently home loans tend to have the most secure rate and
terms for borrowing. They may also be the only financial tool
available that could be tax deductible. |
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